Healthcare reform discussion about healthcare costs often turns to private insurance plans. But state health plans have a stake in the matter too, and in some ways they’re more vulnerable.
State workers are less likely than their public sector counterparts to be uninsured. States also typically pay a higher share of the insurance premium compared to private sector plans. That means that although healthcare costs are rising for everyone, states will be more affected by those rising costs, said Mark Duggan, professor of business and public policy and health care management at the University of Pennsylvania’s Wharton School of Business.
States are taking a number of approaches to the problem. Economists, policymakers and state health plan officials convened at North Carolina State University on Friday to discuss those approaches at a symposium on state health plans. At least seven different states were represented in the event titled “State Health Plans During Times of Fiscal Austerity: The Challenge of Improving Benefits While Moderating Costs.” The event was coordinated by the North Carolina Department of State Treasurer. Here are approaches that three states have taken to trim healthcare costs.
Rhode Island. The nation’s smallest state does have one advantage compared to its larger counterparts: It’s easier to try things to see if they work in a small state than in a large one, said Susan Rodriguez, deputy personnel administrator for the State of Rhode Island. But Rhode Island does have challenges that some states, particularly those in the South, do not — unions. About 87 percent of Rhode Island state workers are union members.
Facing budget constraints, Rhode Island needed to turn to those unions to find a way to reduce healthcare costs. The challenge, Rodriguez said, was that unions were reluctant to change the plans. Rhode Island came up with “wellness incentives.” The state would increase employee share of healthcare costs by $500. But workers could also receive up to $500 in credits toward those costs for participation in wellness programs. For example, taking a health assessment qualifies a worker for a specified amount of credit dollars. A body mass index assessment gives additional credit dollars. And taking action on the BMI would give them even more credit dollars.
Rodriguez said the state was able to win the unions over by getting union leadership on board and showing the workers that they would benefit from the changes. Rodgriguez said that participation in “Rewards for Wellness” is at about 65 percent of employees and since its introduction in 2008, the state has documented savings from the program.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Tennessee. Laurie Lee, executive director of the state’s benefits administration division, said that several years ago, the state had three health plans — all equally poor. The state realized it needed to change the plan design. The state kept a standard preferred provider organization (PPO) plan. But in 2011, Tennessee added a new partnership PPO plan called ParTNers for Health. The plan is administered by BlueCross BlueShield Tennessee and Cigna. In contrast to the standard PPO plan, the partnership plan incents workers to improve their health by offering a lower premium. To participate in the partnership plan, workers must agree to a “partnership promise,” a commitment to take steps to improve their health. Partnership participants must answer a questionnaire about their health. Lee said that additional rewards are being considered for the future. She said it’s too early for Tennessee to have any usable data data but the state is building a database to measure progress.
Virginia. In fiscal year 2010, 29 percent of the claims covered by claims by Virginia state workers were related to obesity, said Gene Raney, director of Virginia’s department of human resources management. The state health plan covered bariatric surgery but the problem was that many people who had the surgery regained the weight. Lawmakers wanted to elminate that coverage. But Raney said that his department thought there was still value in covering it. The key was to improve outcomes.
In February, 2010, Virginia launched an obesity education program. The state health plan still covered bariatric surgery, but in order to get the surgery, a state employee must participate in a coaching program before and after. Raney said that some people who start the coaching program but don’t go through with the surgery still see benefit from the coaching. He added that that he’d like to expand the program so that people can get weight-loss coaching even if they don’t want bariatric surgery.
